Some professions require certain kinds of insurance as a condition of membership to specialist associations or simply as a part of law. Accounting is one of these professions, and the AAT or Association of Accounting Technicians has clear rules on what a professional has to have in place. AAT insurance rules say someone must have a minimum level of professional indemnity insurance to be a member in practice.
Professional indemnity insurance is often shortened to PII and is a kind of insurance which pays someone’s legal bills and compensation costs if they face action. Accountants are not the only ones to take out this kind of insurance, the likes of architects and private doctors often have this protection as well.
However, in recent years many other types of expert have taken out professional indemnity insurance because of heightened general legal awareness which can see clients pursue legal action in the event they are unhappy or feel that they have lost money as a result of erroneous advice offered by a hired expert.
AAT Insurance rules are therefore nothing out of the ordinary and quite similar to conditions placed on other professions. Policies providing professional indemnity cover are normally worded to ensure that somebody is entitled to help with their legal costs in the event that they face action due to a real or perceived error, omission, or act of negligence made in connection with their general business.
Policies can protect individuals or firms in general, and always come with a set policy limit. This is because insurers will cover someone’s compensation and legal costs only up to a set point, although it is often possible to get a deal which has enough protection to provide generally adequate cover for your business. Some policies will protect somebody up to tens of millions of pounds, although not everyone will need this.
When taking out cover it may not always pay to simply go for the minimum required level, such as that imposed by AAT insurance rules. There are often some other things to consider which may be included as part of a deal, including the possible option of public liability cover, although some companies will include this with a deal automatically. Somebody may also want to look at run off cover, which protect somebody after they have retired for a while, or for a period in between insurers, and retroactive cover, which will protect somebody against claims which arrive in future but relate to something which happened in the past.
When you become a member of the AAT, you may not realise that professional indemnity insurance is compulsory before you can actually begin working for yourself. AAT insurance is designed to protect you in case something goes wrong when you are dealing with your clients. Generally professional indemnity insurance will protect you against breach of confidentiality, loss of data/documents, negligence and defamation. With varying levels of cover available, it is vital that you choose the right level to suit your needs.
What could go wrong?
The reason AAT insurance is mandatory is because you are offering a professional service. Unlike many other professions, the advice and services that you provide can severely affect the clients business. If you were to give advice that went on to ruin the third party’s business, then obviously they would not be happy and you would end up potentially losing your business after having to pay out thousands of pounds worth of compensation.
Obviously being qualified with the AAT, it is not likely that you will make such drastic errors in judgement. However mistakes can still happen and that is why there is insurance out there to protect both you and the third party.
One problem which you may encounter is if you are in charge of a company’s tax returns. They would send you various documents that you would use to work out their return. If you were to lose those documents then it could seriously affect the tax return and land the company in a lot of trouble. So they could make a claim against you for loss of documents. Another thing that could potentially go wrong is if you provide accounting advice that the company follows and as a result they lose money. You would again be hit with a claim against you and if found guilty you would have to pay compensation to the company for their loss.
Overall AAT insurance protects the third party but it also protects your finances too. If a claim were to be made against you, the legal fees can be fairly high. It wouldn’t matter whether the fault was yours or whether you were found innocent of the claims made against you; it would still be costly proving it either way. So ATT insurance is compulsory for a number of reasons and even if it wasn’t, it would still be something that all accountants should have.
If you are an Accountant, then AAT Insurance could be for you. AAT insurance is a professional indemnity insurance (PII) policy designed for members of the Association of Accounting Technicians.
In almost every trade, professional indemnity insurance is a compulsory requirement for companies providing services and / or skills and helps cover against members’ statutory and contractual obligations.
If you run your own company, then, legal obligations aside, it makes sense to consider protecting yourself against the unexpected. Claims sought against you or an employee could see you facing legal action and huge costs.
There are various types of professional indemnity insurance and, often, various levels of cover too and generally it can provide protections against things like:
- public liability;
- unintentional infringement of intellectual property rights:
- accidental breach of confidentiality;
- loss of data or documents;
- product liability;
- defamation, libel & slander;
- dishonestly, plus much more.
Protecting yourself and your livelihood against the financial ramifications caused by a claim against you does not need to be expensive and can help keep your business afloat should this happen. Certainly, AAT insurance will help to ease any financial worries in such a situation by providing financial assistance with costs – legal and compensation.
When purchasing AAT insurance, as it is such a specialised insurance, it is important that you buy the cover from a reputable provider. Buying it from someone who has experience within your niche sector means you can find the right protection rather than going for a “one-size-fits-all” type of plan that a mainstream insurance provider may offer.
A specialist broker can often be able to offer bespoke insurance so that you get the insurance policy that suits your needs.
Points to consider
- When selecting your insurance, be aware that in most cases you will be liable to pay an excess on your policy;
- Consider retroactive cover. This is where you are protected against claims that arise out of work that was carried out before the policy started;
- Always check that you have the right sum insured. It cannot be stressed enough that being under insured is almost as bad as being without insurance;
- Following on from the point above, if your profession is covered by an authorising professional body, this organisation may well lay down minimum levels of indemnity cover required, as well as excesses;
- The terms and conditions of the policy will differ depending on the insurance providers. Always make sure that you check the pertinent points of the insurance;
Finally, even the tightest run companies can face the prospect of financial ruin should a claim be made against it. AAT insurance can take away this worry.
If you run a business, then you will need to protect yourself against the unexpected. Claims against you or an employee; the loss of sensitive documents, carelessness, etc, these are difficulties that any business could face. AAT Insurance is protection designed for Association of Accounting Technicians. Professional indemnity insurance is a compulsory requirement for all members in practice and can provide cover against members’ statutory and contractual obligations.
There are diverse types of risk management insurance available for businesses and contractors, all which can help minimise any financial loss as well as personal stress if a claim is made against you.
Protecting your livelihood against financial disaster caused by a claim against it does not need to be expensive and can help keep your business afloat should this happen. AAT insurance will help to ease any financial worries in such a situation by providing recompense.
And deciding where you buy your AAT insurance need not be difficult.
However, as with all things financial, you need to choose your insurance with care, and that is why business people like you will use the services of a reputable provider. Specialist providers of professional indemnity insurance products will have unlimited expertise in the sector, enabling them to provide a policy that best suits your needs.
When choosing your insurance, do note that as with most insurance policies, generally you will be liable to pay an excess on your policy.
Things to consider before you buy your policy include:
- ensuring that you are properly covered as often, there may be a long delay between an event and the subsequent claim. For example, if you are in the middle of changing insurers or shutting your business, arrange a “run-off” cover for a period of time after the cancellation of the existing policy. Or, ask your new insurance provider to accept new claims for prior incidents;
- there are with many personal indemnity insurance policies diverse levels of cover, so ensure that you have an ample amount of protection;
- the terms and conditions of the insurance can differ depending on the providers. Therefore, always ensure that you check them to confirm the pertinent points of the insurance.
To sum it up, by choosing your policy with care, you can have peace of mind. Financial collapse caused by a claim against your company is a worry that all business owners face. But you can protect yourself against this with AAT insurance.